The Fannie And Freddie Bailout, In 10 Easy Links

If you're looking to understand today's announcement about the U.S. government swooping in to rescue mortgage agencies Fannie Mae and Freddie Mac, you could start with a New York Times article that appeared on Friday:

"Main Bank of China Is in Need of Capital"

The story detailed the problems that China's central bank faces as its investments in the American economy have turned out poorly. In a bid to finance its ongoing industrialization, China has bought some $1 trillion worth of Treasury bonds and debt from U.S. agencies. A lot of that investment has come in so-called mortgage-backed securities issued by Fannie Mae and Freddie Mac.

With Fannie and Freddie (more on them later) in serious trouble, China's central bank has also felt the pinch. At home, Fannie and Freddie's problems look like blocks of foreclosed homes in new developments. For the global economy, they look a lot scarier than that.

"Fannie Mae and Freddie Mac are so large and so interwoven in our financial system that a failure of either of them would cause great turmoil in our financial markets here at home and around the globe," Treasury Secretary Henry Paulson told the nation. "This turmoil would directly and negatively impact household wealth: from family budgets, to home values, to savings for college and retirement. A failure would affect the ability of Americans to get home loans, auto loans and other consumer credit and business finance. And a failure would be harmful to economic growth and job creation."

It's a frightening prospect, for sure, if not a very clear one. You can follow the coverage on this blog and at npr.org/economy. After the jump, we'll provide a quick primer -- 10 links to stories that need reading now.

Continue reading "The Fannie And Freddie Bailout, In 10 Easy Links" »

Laura Conaway

2:01 PM ET | 09- 7-2008 | permalink | comments (9) | e-mail post

Open Thread: Got A Question About Fannie/Freddie?

Wait, this has something to do with China?

David McNew/Getty Images

 

The U.S. government is stepping in to take over Fannie Mae and Freddie Mac. The beleaguered mortgage companies hold, oh, about half the nation's $12 trillion mortgage market. With the federal takeover comes the ouster of the companies' top executives and the entrance of untold amounts of financing from American taxpayers. Officials say they're acting to protect the global economy, since so many outside players -- most notably China-- have bought into Fannie and Freddie.

That's the news. Now come the questions. Why do policymakers want to do this now? How much will it cost the government? How did the situation get so dire? And, everyone's favorite, what does all of this mean to you?

We'll wrestle with these questions and more, free of charge. Just drop us a line in the comments, please.

Laura Conaway

11:26 AM ET | 09- 7-2008 | permalink | comments (21) | e-mail post

After Immigration Raid, Locals Line Up For Jobs

Job applicants gather at the Howard Industries plant in Laurel, Miss., two days after an immigration raid.

Rogelio V. Solis/AP Photo/

 

Job seekers have been lining up at the Howard Industries electronics plant in Laurel, Miss., where federal agents on Monday arrested 595 suspected illegal immigrants. The workers came from several Central and South American nations -- the list includes Brazil, El Salvador, Mexico and Peru -- as well as Germany.

The local paper, the Laurel Leader-Call, has pulled several threads from the developing story.

Employees inside the plant say Immigration and Customs Enforcement was tipped off after friction between the union and immigrant workers. Union workers told the paper that immigrants sometimes got as much as 40 hours a week in overtime. Immigrants, meanwhile, reported the union pressured them into joining by saying that a raid was coming and that union members wouldn't be taken.

Howard posted a sign last week, before the raid, saying it would be hiring. As news of the raid spread, local people began applying. With unemployment in the county at 6.5 percent -- lower than the statewide rate of 8.5 percent -- one economist told the Leader-Call the region has something of a labor shortage.

"That leaves businesses with a serious problem," said William Gunther, a professor at the nearby University of Southern Mississippi. "That doesn't justify, but it certainly explains why they might be hiring individuals who show up and say, 'I'll work for you.' "

Laura Conaway

2:08 PM ET | 08-28-2008 | permalink | comments (0) | e-mail post